Oscar Mayer Loses Appeal On Wages

Firm Owes Workers Here $7 Million, Court Rules

February 08, 1985|By James Warren.

Workers at the Chicago plant of Oscar Mayer Foods Corp. are owed about $7 million in back and future wages as a result of an illegal company decision to cut wages, a federal appeals court ruled Thursday.

The decision upholds a ruling by a United States district judge and means that, during a period of upheaval in the packing industry nationwide, 600 North Side workers apparently will be returned to their position as the industry`s highest-paid hourly workers.

Moreover, the decision could unintentionally add to the havoc in the industry, at least in the Midwest. Because the decision returns the workers to their previous hourly wage rate of $10.69, it raises questions about the validity of many companies` claims that the new ``pattern`` wage rate in Midwest meatpacking is $8.25.

That is important because many industry contracts are geared to a pattern wage, or the rates that other meatpacking employers in a geographic area generally pay.

An attorney for the company indicated that Oscar Mayer had not yet studied the decision and considered whether to appeal. It could try to persuade the entire appeals court to reconsider the decision or seek a reversal by the U.S. Supreme Court, but chances of success would appear to be slim.

The ruling by the 7th Circuit Court of Appeals involves a dispute between the company and Beef Boners Local 100, a part of the AFL-CIO`s largest affiliate, the 1.3 million-member United Food & Commercial Workers Union. It centers on a three-year labor contract originally negotiated in 1980 and then extended in 1982 through June 1, 1986, by mutual agreement.

The company unilaterally reduced wages last April to $8.25 from $10.69, citing contract language allowing it to adjust wages that it contended placed the firm at a competitive disadvantage.

Oscar Mayer`s move angered the union, which maintained that the basic contract was superseded by a supplemental accord in which the union gave up a lucrative cost-of-living allowance in return for freezing base pay at the $10.69 rate. The union, led by its top official, Walt Piotrowski, took the matter to arbitration.

The arbitrator, Arthur Malinowski, a Loyola University specialist in industrial relations, ruled in favor of the union. The company then appealed the arbitration award to U.S. District Court Judge John Grady, but Grady upheld Malinowski.

Oscar Mayer took the case to the appeals court. Responding to union anxiety about mounting financial problems for its workers, the court agreed to hear the appeal on a special, expedited basis. Arguments took place Jan. 25, and the decision came just 13 days later, months quicker than normal.

Appeals Judges William Bauer, Jesse Eschbach and Thomas Fairchild ruled that, ``We have no problem in determining from the record before us that the arbitrator`s award is clearly based on the collective bargaining agreements of the parties.``

The meatpacking industry has been traumatized by bankruptcies, growth of nonunion firms and fierce competition, leading to a drop in the basic hourly wage rate at many firms to about $8.25 from $10.69. It is believed that the only workers currently at $10.69 are at several plants in the Los Angeles area.